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All at the South China Sea

China sees the U.S. hand ubiquitous in the July 12 award by the Permanent Court of Arbitration on the Scarborough Shoal dispute in the South China Sea — first in instigating the litigation by the Philippines, then in fanning the flames of discontent among the countries of the Association of South East Asian Nations (ASEAN), and finally in securing its one-sided outcome. Chinese experts further allege that the five-member tribunal was tainted — selected by the President of the Court, Shunji Yanai, allegedly a right-wing, pro-Abe, and anti-Chinese national of Japan. China’s responses to the ruling might be the precursor to a new edition of a cold war.

The Court ruled that China’s claims over the waters enclosed by the ‘Nine-Dash Line’ had no legal basis under the United Nations Convention on the Law of the Sea (UNCLOS), that China had no claim to historic rights to resources there, and that it had aggravated the dispute by building an artificial island on Mischief Reef, besides violating the Philippines’s sovereign rights within its Exclusive Economic Zone (EEZ), including its fisheries and petroleum exploitation. Entitlement to islands and the EEZ, the Court further held, must be based on natural conditions, and not as the result of artificial augmentation by building and reclaiming land.

The ruling has comprehensively rejected China’s territorial and sovereignty claims in the disputed area, is dismissive of China’s activity in turning reefs, rocks and low-tide elevations into artificial islands, replete with military structures such as airstrips and fortifications in waters that belong to the Philippines, and called attention to China’s actions as having resulted in “irreparable harm” to the marine environment there.

Summary rejection

Chinese leaders have declared the ruling “null and void.” In her address at the World Peace Forum in Tsinghua University on July 16, the Chinese Vice-Premier, Liu Yandong, called it “illegitimate and unlawful”. The tribunal had “wilfully overstepped and abused its mandate,” she added, besides negating “China’s territorial sovereignty and maritime entitlements in the South China Sea”.

China maintains that its 2006 declaration, excluding issues of maritime delimitation and historical bays or titles from the UNCLOS dispute settlement mechanism, denied the Court jurisdiction in this case. Conventionally, third party arbitration involves the consent of both parties, but is not mandatory under the UNCLOS. It stipulates instead, as mentioned in the Award, that the “absence of a party or failure of a party to defend its case shall not constitute a bar to the proceedings”.

While asserting that China would not accept “the so-called award,” Ms. Liu reiterated China’s commitment to “peacefully settling relevant disputes in the South China Sea through negotiation” with countries directly concerned, “on the basis of respecting historical facts and in accordance with international law”.

Addressing the same forum, exactly a year ago, Foreign Minister Wang Yi had assured that China “would uphold freedom of navigation and commerce,” including in the South China Sea, “based on international law, and fulfil all international responsibilities and obligations as a main littoral state.” The embrace of global rules here was more emphatic, as also the indication that China was only one of the littoral states and, by implication, not in exclusive possession of the area enclosed by the South China Sea.

In disregarding the ruling, and by its occupation, reclamation, and construction of military facilities on disputed territory, China has acted as a practitioner of hard power. In defence of China’s rejection of the ruling, Chinese commentators have cited the U.S. dismissal of the 1986 judgment of the International Court of Justice awarding reparations to Nicaragua for “Military and Paramilitary Activities in and against Nicaragua” by the U.S., and the U.K.’s rejection of this year’s ruling by an expert group under the UN Commission on the Limits of the Continental Shelf in favour of Argentina in the context of Malvinas.

Having changed the facts on the ground, China has consolidated its possession of the disputed islands in the South China Sea. ASEAN claimants include Brunei, Malaysia, the Philippines, and Vietnam. China, furthermore, has effectively divided ASEAN on this issue. The group is unable to adopt a common position concerning a territorial dispute directly involving four of its 10 members.

The result of the prevailing power equations can be seen in the immediate reaction by the newly elected Philippines President, Rodrigo Duterte, calling for talks with China to resolve their dispute. Although the provisions of the UNCLOS make the Award “final and binding,” the absence of any enforcement mechanism limits the choice for the Philippines.

On June 14, on the occasion of a Sino-ASEAN meeting at Kunming commemorating the 25th anniversary of their dialogue, Chinese pressure, exerted through Cambodia and Laos, prevented an ASEAN declaration expressing “serious concerns” over the South China Sea disputes, which have “eroded trust and confidence, increased tensions, and which may have the potential to undermine peace, security, and stability” in the region. Piqued by the spiking of the declaration, Malaysia placed it on the website of its Foreign Office, only to take it down when China strongly remonstrated with Malaysia.

What was a resolvable difference

The arbitration award has, nevertheless, dented China’s interests in multiple ways. It has derailed China’s relations with major ASEAN countries, converting a buffer zone into a potential battlefield. A resolvable difference on the delimitation of maritime rights has become a dispute concerning territory and sovereignty. Eight of the ASEAN members issued country statements supportive of the ruling. Most were unambiguously worded, those of Vietnam and Myanmar the strongest amongst them.

Although China had reserved its position on the UNCLOS provision concerning arbitration, the Convention expressly disallows derogations by those who adhere to it. By calling the award “a political farce,” China is seen as reneging on its commitment to international law by turning its back on the UNCLOS, which it has signed and ratified.

By following the U.S. and U.K. playbook on Nicaragua and Malvinas, China has shown it is no different from other imperial powers. Moreover, China’s dismissal of the ruling does not show a “win-win” attitude, propagated by it to create “communities of common destiny” from Asia to Eurasia, and through the maritime silk route that has the ASEAN countries at its centre. It puts a question mark over China’s regional vocation.

Its stand-off with its ASEAN neighbours is likely to fester unless China moves quickly to negotiate and settle the disputes with strategic compromises. Senior officials have signalled China’s readiness to negotiate a solution.

Reconciling China’s nationalist rhetoric might prove difficult to combine with a commitment to concessions. There is nothing that China can offer to match the Award, which has completely rejected its claims. It would be hard for the Philippines or the other claimants to accept less than that, howsoever skewed the power balance might be between them and China.

Lessons from the developments

The Philippines has gained by going to the Tribunal. Its legal position on the disputed territory has improved greatly, even if the matter was to be eventually settled through bilateral negotiations.

China has demonstrated its will to power and determination to defend its interests in the teeth of opposition, which includes not just the U.S. but also many of China’s neighbours. It has shown that on an issue important to it, it would pursue its objectives relentlessly, with or without international support, unmindful of the opprobrium it might attract.

China mistakenly assumed that while its own rights concerning the South China Sea were genuine, historic, and legitimate, the case of the other claimants was being fanned by narrow elites, or was conspiratorially inspired by foreign forces.

The sharp regional reactions have, however, surprised China. They might help China learn how to become one of the great and responsible powers in the world. China lifted half a billion of its people out of poverty in the span of a single generation, a feat unprecedented in human history. It now seeks to do more — avoid the middle-income trap and a hard landing of its economy. If China wants a friendly external environment to continue its on-going transformation, it would have to be more sensitive to the concerns of other nations with whom it is forging economic partnerships, especially its neighbours.

China’s leaders might not have had the right inputs required for taking a wiser course. Its officials, reluctant to share unpleasant assessments with their leadership, publicly claimed support from countries that eventually criticised China. Their success in preventing ASEAN from adopting a common position on a dispute with China involving four of its members might have lulled them into writing off future reactions in individual ASEAN countries.

It is unlikely that China will desist from its hard power projection. Whether or not China provokes further confrontation immediately, it might test America’s resolve to stand by its Asian allies in the early days of the new U.S. administration. China’s contribution to global recovery since the crisis of 2007-08 has been significant. Its faltering, or falling prey to adventurist action in the South China Sea, will not be good for itself, the region, or the world, including India.